Major bank eases IO lending conditions

The lender has dropped fixed rates for IO loans and brought in a two-year introductory discount for one of its IO variable products

Major bank eases IO lending conditions

News

By

Westpac has dropped its fixed rates on interest only loans while bringing in new introductory offers on a number of variable rate products.

The bank has decreased rates on its Fixed Rate Home and Investment Property Loans with IO repayments by as much as 30 basis points. This sets the new fixed rates for owner occupiers between 4.59% p.a. and 4.99% p.a. while rates for investors lie between 4.79% p.a. and 5.19% p.a.

“We regularly review our rates. We've been adjusting some over the past few months to remain competitive and ensure we meet our composition targets – i.e. the regulator’s 30% sector cap on IO loans,” a bank spokesperson told Australian Broker.

Rates for fixed rate interest only investor loans locked in for between six and 10 years remain unchanged.

Westpac has also brought in a two year introductory offer on its Flexi First Option Home and Investment Property Loan for new lenders. Refinancing and foreign lending is excluded.

Changes include an increased discount for the first two years of the Flexi First Option Home Loan for P&I payments and the introduction of a similar discount for Flexi First Option IO investor loans. After two years, the loan will roll over to the base rate:
 
  2 year intro rate Discount Base rate
P&I owner-occupier 3.88% p.a. 0.71% p.a. 4.59% p.a.
P&I investor 4.18% p.a. 0.96% p.a. 5.14% p.a.
IO owner-occupier 5.18% p.a. None 5.18% p.a.
IO investor 4.88% p.a. 0.77% p.a. 5.65% p.a.

The bank has also removed its revert rate discount from all Flexi First Option Home Loans for owner occupiers and investors.

All changes came into effect on 30 August.

Related stories:

Virgin introduces new home loan promotion

Credit union unveils 3.74% OO interest rate

Major bank refines serviceability criteria

Keep up with the latest news and events

Join our mailing list, it’s free!